Bigger tax worsens illicit cigarette trade

Significant increases in tobacco excise tax will exacerbate illicit cigarette trade, the Philippine Tobacco Institute told senators Monday.

PTI representative Carmen Herce, in a hearing of the Senate committee on ways and means chaired by Senator Sonny Angara, cited the recent report by the Intellectual Property Office of the Philippines that cigarettes accounted for the bulk of the pirated and counterfeit goods seized in 2018 with a total value of P20.250 billion.

IPOPHL said in a statement the inter-agency National Committee on Intellectual Property Rights, where it serves as vice chair, seized a total of P23.6 billion worth of fake goods in 2018, higher than the 2017 level of P8.2 billion.

Herce said high tax increases had not only caused the tobacco industry to contract but also enabled illicit trade of tobacco products to flourish.

She said legal cigarette volume went down by 43 percent from 127 billion in 2012 to 73 billion in 2017, driven by the 1,187-percent excise tax increase from 2012 to 2017.